Africa needs backward integration for industrial resurgence to protect local industries

Africa’s manufacturing sector has been caught in a paradox for many decades as the vast reserves of critical raw materials from cobalt in the Democratic Republic of Congo to cotton in Burkina Faso, to cocoa in Côte d’Ivoire and copper in Zambia among others are being exported, while its industries often pay premium prices to import processed versions of these very resources.

This reliance on foreign inputs, coupled with infrastructural bottlenecks, trade barriers, and global supply chain shocks, has stifled Africa’s industrial transformation.

According to PAMA global bulletin April 2025 edition, the imperative for backward integration looms larger than ever, noting that with geopolitical fractures and climate-induced disruptions intensifying worldwide, embracing backward integration is not just advisable, it is absolutely critical for safeguarding local industries against these multifaceted geopolitical challenges.

“There is no doubt that, across many African economies, securing raw materials has been a major hurdle. Industries from cement to textiles have often found themselves paying a premium to third parties for imported inputs due to underdeveloped domestic supply chains. The lack of reliable local sources have forced manufacturers to absorb high transportation and tariff costs, which in turn drive up the price of finished goods.

“Moreover, political instability, infrastructural deficits, and inconsistent industrial policies have repeatedly disrupted the supply of essential raw materials, further hampering manufacturing performance. Such disruptions have underscored the urgent need for a strategic shift in how these inputs are sourced and managed.

“The need for backward integration has become increasingly critical in today’s rapidly evolving global economy. Recent case studies from Nigeria illustrate its transformative potential. For instance, in West Africa, Nigeria’s cement sector experienced a dramatic turnaround after the government implemented a backward integration policy in 2002.

“Similarly, through UNIDO, in collaboration with ITC, FIFA, and WTO, countries such as Benin, Burkina Faso, Chad, Mali, and Côte d’Ivoire have been encouraged in the cotton-to-textile value chain development. The Republic of Benin specifically initiated a framework aimed at promoting backward integration throughout the entire cotton value chain. This initiative ensures that cotton production is not solely for raw exports but also involves processing, weaving, and stitching to produce finished garments. The initiative is driven in collaboration with some private sector-led actors, including ARISE Integrated Industrial Platforms, vis-à-vis a heavy investment in cotton projects. Benin’s approach underscores how backward integration can create a robust industrial base from the ground up.”

PAMA acknowledged that backward integration fosters job creation and skills development, reduces dependency on foreign expertise and enhances a reliable and predictable operating environment for local industries by protecting them from external shocks such as tariff wars and global supply chain disruptions.

PAMA urges adoption of an in-depth and broad-based backward integration model in Africa’s manufacturing sector, adding that African governments should fully support this transformative pathway in their respective countries, as it will reduce costs and also drive sustainable industrialization.

It noted that through the backward integration model, manufacturers gain direct control over raw materials, standardize processes, and accelerate improvements in finished goods, adding “Localizing the supply of raw materials is key for governments and private-sector partners to reduce production costs, improve product quality, and build resilient economies.”

Nevertheless, it stressed that achieving success in backward integration requires concerted efforts, including investments in critical infrastructure, fostering technology transfer, and enhancing stable and clear industrial policies to create the needed enabling environment.

As Africa faces ongoing global economic volatility and rising competition, according to PAMA, the strategic full-scale implementation of backward integration can catalyze the transformation of the continent from a raw material supplier into a hub for value-added production.

“With the right blend of policy innovation and public-private partnerships, backward integration has the potential to unlock Africa’s vast industrial capacity, making manufacturing not only more competitive but also a driver of inclusive growth and job creation across the continent,” PAMA emphasized.